LAWMAKERS BLOCK MOST TAX INCREASES, PASS WORKERS COMP OVERHAUL

Overhaul of California workers’ compensation system passes with bipartisan support

proposed tax and fee increases as they worked into early Saturday morning to wrap up the session for the year.

The Legislature let stand a controversial fire fee on rural residents, blocked a corporate tax hike to pay for middle-class college scholarships and rejected a mandatory mattress recycling program that could have added up to $8 to the price of new beds.

But lawmakers approved a 1 percent tax on wood products supported by the timber industry, hiked boat registration fees to fight the invasive quagga mussel, and extended a $100 million annual tax break to keep film and TV production in California.

Early in the day Friday, lawmakers passed sweeping changes to state and local public pension systems that will save government money but reduce benefits for mostly new employees. Late at night, they approved another big deal with bipartisan support: revamping the state workers’ compensation system.

The changes were sought by some business groups concerned about escalating insurance costs and labor unions that have been working for years to regain benefits that were eroded in a 2004 overhaul of the $16 billion system.

The bill makes substantial reforms to the century-old system that provides medical care and compensation to workers who injure themselves or fall ill on the job.

It changes how benefits are calculated, creates a binding arbitration process to resolve coverage disputes and eliminates coverage for conditions that most commonly lead to lawsuits, including insomnia and mental health problems.

Supporters said the reforms will increase compensation for disabled workers by $700 million a year, boosting benefits by an average of 30 percent for individual disabled workers. The annual savings that could result from the reforms are in dispute. Estimates range from $1 billion to less than one-tenth of that.

The rising costs associated with worker claims could force insurers to hike premiums by more than 10 percent next year, according to some estimates.

That bill — and hundreds of others — are now before Gov. Jerry Brown, who has until the end of the month to act.

It was a night of nail-biting to beat the midnight constitutional deadline to act on most bills. There were also intense negotiations involving outgoing San Diego Assemblyman Nathan Fletcher, a Republican turned independent.

Fletcher’s role came in talks over legislation to close a loophole that allows some out-of-state companies to pay lower taxes. The revenues initially were earmarked for scholarships to middle-class students.

To woo Republicans in the Senate, Fletcher and Assembly Speaker John Perez, D-Los Angeles, tried to package the tax hike with other trade-offs.

One of those first dangled was a repeal of the $150-per-year fire fee on some 825,000 rural residents who count on Cal Fire to defend their property. Some of the new tax revenue would have gone to backfill the $80 million Cal Fire would have lost without the fee.

“It was incredibly frustrating to see California’s elected officials side with out-of-state companies at the expense of their own constituents,” said Fletcher, who ran for mayor but lost in the June primary.